EghtesadOnline: The Central Insurance company of Iran, the industry’s regulatory body, is in the process of setting up a special fund to cover 30 million homes against natural disasters.
Parliament recently passed a bill calling for ‘Natural Disaster Insurance Fund’ to cover residential units subscribed to the national power grid, Gholamreza Soleimani, the CII president, was quoted as saying by IRNA.
The fund is expected to start work in the next Iranian fiscal year (begins March 2021). The news agency said the Ministry of Economy and the CII are crafting the operational framework of the fund.
It will be founded with an initial capital of 500 billion rials ($2 million). "Home owners will pay half the premium and the other half will be put up by the government," Soleimani said.
According to the bill, the CII is in charge of assessing risks and set premium rates subject to geography of the residential areas.
Buying the home insurance against natural disasters would be mandatory, the official said and premium amounts will be added to the electricity bills.
Officials say when buying insurance is voluntary most people remain disinclined. Of the 20 million residential units barely 20% are insured against natural disasters, according to the Disaster Management Organization.
Mandatory insurance would very likely push shoddy buildings out of the market because builders will have to uphold higher construction standards.
Iran has suffered almost 125 natural disasters in 25 years resulting in 73,000 deaths, 145,000 injuries and more than 41 million lives affected.
In a talk with IRNA, Soleimani presented update on the contribution of the insurance industry to the economy. “The insurance industry’s share in GDP is 2.66%,” he said noting that it was 2.4% at the beginning of the current calendar year in March 2020.
“We saw 37% increase in life insurance premiums in the past eight months…This segment now accounts for 14.5% of the total premiums.”
The senior official added, “We were worried about a possible decline in life insurance premium after the outbreak of Covid-19. Fortunately data show otherwise.”